Government of Greenland and Alcoa to Study Feasibility of Constructing Hydro-Powered Aluminum Smelter

Today, the Greenland Home Rule Cabinet agreed to enter into a
Memorandum of Understanding (MOU) with the aluminum company Alcoa Inc.
The agreement entails co-operation on a feasibility study for
constructing an aluminum smelter with a 340,000 metric-ton-per-year
capacity in Greenland.

The MOU also encompasses a hydroelectric power system and related
infrastructure improvements, including a port. The exact size and cost
for the overall venture will be determined when the project plan is
finalized.

Under the MOU, the parties will begin site selection,
environmental studies, engineering assessments, and other aspects of
the project. If the viability of the project is proved, ground
breaking for the hydroelectric power system would be expected in 2010,
and for the smelter in 2012. The smelter could then commence operation
by the end of 2014.

"Alcoa has a disciplined growth strategy, as aluminum demand is
strong and consumption is expected to grow significantly over the next
decade. We have nearly 120 years of experience in developing and
operating aluminum smelters around the world in a sustainable manner,
sensitive to the environment, and valued by the communities in which
Alcoa operates," said Alcoa Chairman and CEO Alain Belda. "We will
bring our technology and management capabilities to this venture to
ensure the development of a highly-competitive,
environmentally-friendly smelter that adheres to our stringent Values
and delivers sustainable development."

"The aluminum industry offers an excellent opportunity that we may
in Greenland exploit our hydropower resources for the benefit of the
country's occupational and business development," stated Minister of
Trade, Labor and Vocational Training, Siverth K. Heilmann. "At the
same time the project is in full accordance with the Cabinet's
long-term goal of replacing hydrocarbon-based energy production with
hydropower, one of the reasons being concern for the global
environment.

"I have visited smelters in different parts of the world, and
through personal experience learned about Alcoa's consideration for
the environment and commitment to ensure that a future smelter will
also in Greenland become an asset to the local community, socially and
educationally, as well as economically," said Heilmann.

About the choice of Alcoa as partner in preference to other
interested aluminum companies Siverth K. Heilmann explains, "Alcoa has
shown their determination to invest considerable resources in the
development of this project together with us. Simultaneously, they
have been ready to meet Greenland's requirements as to the pace of the
project development, the environmental process, efforts in training
and education etc. We still have far to go and important decisions to
make before the project becomes reality, but with this agreement,
Greenland and Alcoa have taken a very important step on the way."

In order to facilitate a quick initiation of the important field
surveys, the parties have agreed that the MOU will be signed in
connection with the upcoming meeting of the Joint Committee in
Ilulissat, 25-27 May 2007.

Preferred sites for the proposed smelter will be collaboratively
identified by Alcoa and the Greenland Home Rule Government. The three
municipalities of Nuuk, Sisimiut and Maniitsoq, which have all
selected potential locations, support the project, and will take
active part in the continued work. Final recommendations will go to
the Greenland Home Rule Government for ratification.

Upon completion, this development project would represent one of
the largest investments in Greenland's history, stimulate economic
growth and manufacturing diversity, create up to 600 direct, stable
jobs, and contribute to increase Greenland's overall productivity and
economic self-support.

About Greenland

Greenland stretches an area of 2,166,086 square kilometers, thus
making it the largest island in the world. More than 80 percent of the
country is covered by the massive ice cap. Although situated between
Canada and Iceland, Greenland is historically, politically and
economically closely related to Denmark. Today, Greenland's popularly
elected Home Rule Government possesses a high degree of autonomy.

With its present-day population of 57,000, mainly of Inuit origin,
Greenland has in less than a century developed from a traditional
hunting economy into a modern society, and presently holds one of the
world's most modern sea-going fishing fleets and emerging tourism and
mining industries. Also, extensive oil exploration activities off
Greenland's West Coast will soon be underway. Greenland's Arctic
environment is particularly fragile, and the Greenland authorities
scrutinize industrial ventures closely, cooperating with project
developers to take appropriate measures to prevent and alleviate
possible adverse effects to the environment.

About Alcoa

Alcoa (NYSE:AA) is the world's leading producer and manager of
primary aluminum, fabricated aluminum and alumina facilities, and is
active in all major aspects of the industry. Alcoa serves the
aerospace, automotive, packaging, building and construction,
commercial transportation and industrial markets, bringing design,
engineering, production and other capabilities of Alcoa's businesses
to customers. In addition to aluminum products and components
including flat-rolled products, hard alloy extrusions, and forgings,
Alcoa also markets Alcoa(R) wheels, fastening systems, precision and
investment castings, structures and building systems. The company has
122,000 employees in 44 countries and has been named one of the top
most sustainable corporations in the world at the World Economic Forum
in Davos, Switzerland. More information can be found at www.alcoa.com